Japan Stocks Rise on Bets Elections Yield New Leadership

By Norie Kuboyama -
Nov 16, 2012

Japan’s Topix Index (TPX) capped the
biggest two-day gain since March 2011 amid surging volume as the
yen weakened on speculation elections next month will hand power
to an opposition party pushing for more central-bank easing.

The Topix rose 1.9 percent to close at 751.34 in Tokyo,
with more than three shares advancing for each that fell. The
gauge rose 4 percent in the last two days after elections were
called for next month. For the week, the measure climbed 2.8
percent. The Nikkei 225 Stock Average (NKY) rose 2.2 percent to
9,024.16 on volume 62 percent above the 30-day average.

“There’s expectation the new party will increase stimulus
heavily, making Japanese shares relatively more attractive,”
said Seiichiro Iwamoto, who helps oversee about $33 billion at
Mizuho Asset Management Co. in Tokyo. “Investors are changing
to a risk-on mood.”

Prime Minister Yoshihiko Noda dissolved parliament today,
triggering an election on Dec. 16 that polls suggest his
Democratic Party of Japan will lose. Shinzo Abe, the leader of
the main opposition Liberal Democratic Party, called yesterday
for the central bank to pursue unlimited monetary stimulus to
end deflation and revive an economy that shrank last quarter at
the fastest pace since the 2011 earthquake.

Yen Weakens

Exporters gained after the yen depreciated to as low as
81.46 against the dollar last night in Tokyo, the weakest level
since April 25. Against the euro, Japan’s currency weakened to
103.99 today from 103.13 at the close of stock trading
yesterday. A weaker yen boosts overseas income at Japanese
companies when repatriated.

Ube Industries declined the most in the Nikkei 225, falling
5.6 percent to 170 yen after Citigroup cut the chemicals maker’s
rating to neutral, saying a recovery in the market for materials
used in nylon will take time. Nomura cut its rating to reduce
from neutral.